It’s amazing what a growing small cap can do without an expensive albatross hanging around its neck.
That’s the simple pitch from MoneyMe founder and CEO Clayton Howes, who’s cap in hand in front of investors for a $30 million reset equity raising.
Stockbroker Morgans is understood to have been teeing up meetings in the past couple of days, in a bid to have a syndicate of investors and a deal underwritten by the end of this week.
Funds raised would be used to repay a $25 million short-term facility from Pacific Equity Partners, which helped fund MoneyMe’s acquisition of SocietyOne and is repayable in the next few months.
Fund managers went into the meetings sceptical. It’s a tough time to be chasing growth funding, particularly for a fintech and heavily exposed to the Australian consumer.
It’s even harder when you’re chasing $30 million; a cheque size equivalent to the personal loans/credit cards/car loans company’s market capitalisation.
But no one seems to have told Howes it was a tough task. His pitch was understood to be about profitability – how profitable his business was, and how much more it would be once the short-term loan was paid back.
On one recount to Street Talk, he told investors MoneyMe made $9 million statutory NPAT in the six months to December 31, and another $7 million across January and February. In other words, the business is printing profit.
The other kicker is the savings from repaying the short-term funding - another $6 million to $8 million a year. That’s the albatross that needs removing.
Morgans is trying to price the deal in the next few days. It will be interesting to see who chips into the deal, and at what price.
The stock last traded at 10¢, so it’s likely to be a painful (but necessary) one for existing shareholders, the biggest of which is founder Howes.
